Title Loans without a Title
Title loans without a title? What are the chances? The answer: The chances are great, but they require some forethought and a little work. If a borrower knows exactly what to do, an otherwise submitted application for a title loan without a title results in paid bills.
Title loans have become as popular due their importance in the lives of so many people who would otherwise have no other solution to resolve their financial difficulties. Car title loans, also known as auto title loans, are especially common for their ease and quickness of acquisition as well as their convenience in cases of emergency when other avenues have become untenable to those who have serious debts to pay.
The distinction regarding car title loans, of course, is the need for a vehicle title. Title loans rely on the title to endure. A car title loan without a title is ineffective and risky to both lender and borrower on so many levels. For that reason, a vehicle title is essential.
The point: proof of asset ownership is important because it serves as the heart of a title loan. When a potential borrower applies for a title loan and possesses no title to support the collateral, the car or other vehicle against which the loan is set offers no value to substantiate the money the borrower is to gain, and so title loans without title provisions are rendered useless.
For those who do not know what it is, a title loan represents money offered by a loan servicing company against an asset established as collateral. If the loan were to fall into default, the loan servicing company repossesses the asset to pay the loan in question. Title loans are secure for this reason, and they typically have high interest rates. This type of loan is not inherent in the regular banking system, but it is legal in many states and Canada. Like bank loans, title loans require the same personal documentation for applicant approval and for the same reasons. However, for title loans, an asset title, especially that of a vehicle, is primary to prove clear ownership.
So what happens when a borrower applies for a title loan without title documentation? Various possibilities exist, but, rest assured, borrowers are denied their prize and turned away. For anyone who needs the money right away for emergency relief, that outcome is indeed an unpleasant one.
How to Get a Loan Without Vehicle Title: Vehicle Title Acquisition
There are various reasons why borrowers may not have a title for their vehicles, and all are rectifiable. The processes are similar because the solution is pretty much the same for all of them. Still, each circumstance is worthy of note.
One of the most common reasons a borrower may not have a title is due to simple loss. Over time, drivers simply misplace the title and forget where it is and then are unable to find it later on. Then there is the case when the title has been destroyed, say, in a fire, which can and does happen, especially if misplacement deprives a vehicle owner from safely delivering it from danger. When either of these misfortunes occurs, vehicle owners need to go to the Department of Motor Vehicles (DMV) or the Secretary of State Office in or near their area to acquire a new one. As long as they are owners and can prove that claim, the process should be effortless, although not always transpiring right away.
But what if the vehicle was gifted and the person who had given it neglected to provide the title to the recipient, in this case the loan borrower? That can be a sticky situation to say the least. In that case, said borrower should contact the person who had provided the vehicle as a gift and retrieve the title if possible. Sometimes, in the event the latter no longer has the title—due, say, to time lapse—both parties need to go together to a DMV or Secretary of State office in the state where the vehicle was purchased and apply for a copy of the title. This process takes longer and becomes a bit more costly, but with the right documents, the result should be a favorable one.
So, yes, loan borrowers can still obtain a copy of their vehicle title to complete their applications for the title loans they need. In fact, they should make certain they have their vehicle titles prior to going into the loan agency. Thinking ahead and being prepared can minimize headaches, eliminate complications and ensure the application process runs smoothly from beginning to end.
In order to do this, they should tally the full array of documents needed for both title acquisition, if it is necessary, and the completion of their loan application.
In the case of retrieving a copy of their car title from the DMV or Secretary of State’s office, borrowers need:
- Driver's license for proof of age and citizenship
- Vehicle Registration, and;
- Auto Insurance for added strength
A processing fee of about $15.00 is usually required to obtain a copy of the title. For same-day possession, when the title loan is needed right away, an additional fee of $5.00 or more will likely be applicable as well.
Once the title is procured, the list of documents necessary to complete the title loan application process includes:
- Driver's license for proof of age and citizenship
- Registration and title for proof of ownership
- Auto Insurance, which isn’t always required
- Proof of Income, such as official statements that validate employment, unemployment compensation, retirement, Social Security, Disability and other forms of income
Of course, the borrower must meet two other qualifications as well in order for approval to be assured. These two qualifications comprise the standard rule for all applicants:
- The borrower owns the vehicle or other asset clear and clean
- The vehicle or asset involved is completely paid off and lien-free
Borrowers should make sure they have all of these documents and meet both qualifications before heading off to apply for their title loan. Since credit scores are never checked, they are never an issue. So if and when the above requirements are ensured, approval of the loan is easy.
State-by-State Title Loans
Title loans, or more generally asset loans, are legal in 27 states. In these states, struggling residents have an opportunity they wouldn’t have in states where such loans are illegal. Online loan stores, too, offer loans to a wider range of citizens in need.
Still, loan applications and what borrowers can get for their troubles vary from state to state. Each state has different regulatory lending laws. These stipulations govern the nature and amount loan companies are able to provide and charge borrowers. In turn, borrowers can acquire and pay back different amounts in the long run.
Defaulted loans, too, are treated differently per state. Some states have a cap on interest and other fees applied while others are open-ended and can result in repossession of the collateral vehicles at the first sign of default, which happens, though not with frequency.
“Rollovers” are regulated, too. This practice allows borrowers in default to “roll over” into a new loan to avoid default, although with a new set of processing fees. This can become quite expensive, but it prevents the repossession of collateral vehicles. Regulations determine how loan companies handle this practice, but the rules set in place accommodate the borrower’s needs and security, as well as to provide the protection of the collateral vehicle in question.
Below is a list of the states where title loans are legal. Each state is followed by its APR rate and other significant regulatory information. “NL” means “no limitation,” referring to no cap on the amount offered or fees rendered.
- Alabama – 300% APR
- Arizona – 207% APR on the primary $500.00, 180% the second $2,000.00, 156% on the third $2,500.00, and 120% on the balance.
- California – 36% on small loans under $2,500.00. Loans over the maximum have no cap and are subject to higher interest rates.
- Delaware – Not legal (loophole state)
- Florida – 30% APR on all loans
- Georgia – 300% APR for the first tri-monthly period, and 150% for all additional time that follows. Loans issued must be lien-free.
- Idaho - Not legal (loophole state)
- Illinois – Loan limit is $4,000.00 with a repayment process not to exceed 5% of the borrower’s gross income. All payment installments must be equal in amount, with no balloon payments allowed. Refinancing is likewise disallowed unless it is based on 20% minimum of the loan’s remaining principal balance. The APR rate has no limit.
- Kansas – Car title loans are exempt from an APR cap and are therefore categorized and sold to borrowers as open-ended “credit lines.”
- Kentucky – 300% APR
- Louisiana – Loans exceeding $350.00 bear no restrictions, and loan periods extending beyond two months are not disallowed.
- Mississippi – 300% APR
- Missouri – Not legal (loophole state)
- Minnesota – 118% APR
- Montana – Not legal
- Nevada – Not legal (loophole state)
- New Hampshire –300% APR, and loans issued must by lien-free
- New Mexico – Not legal
- Oregon – Not legal
- Rhode Island – Not legal
- South Carolina –All title loans in excess of $600.00 are exempt from the small-loan cap of 36%.
- South Dakota – Not legal
- Tennessee – The overall cost comprised of interrelated fees must not exceed one-fifth (1/5) of the overall loan amount with an addition of a 24% APR, although some sources state a 268% APR.
- Texas – 120% APR
- Utah – Not legal (loophole state)
- Virginia –264% APR on primary $700.00, 216% on the second $700.00 and 180% on the remaining loan balance. All loans must be lien-free.
- Wisconsin – Not legal (loophole state)
In the above states, the regulatory cap on small loans—those amounts generally under $2,400.00, but it depends on state calculations—is 36%. Any amount higher than that is not considered a small loan and therefore has no cap. For that reason, loan companies can apply higher rates to them.
As the previous paragraph infers, loan companies can offer borrowers over $2,500.00 for their troubles. Some provide as much as $10,000.00, although an average recommended maximum amount tends to fall in around $5,000.00. That’s still significant.
Another distinction is the length of the repayment period. Although the typical title loan has a short-term duration of a month or two, some regulatory laws have insisted longer repayment periods for borrowers. This arrangement allows borrowers to pay back their loans with breathing space while avoiding the “cycle of debt” trap that so often ensnares low-income citizens. In this way, borrowers have a chance to repay their debts and retain possession of their vehicles or other assets at the end of their loan’s life cycle.
However, the higher interest rates, which many lawmakers believe weigh heavy on borrowers, serve a purpose: to allow loan companies to earn a profit—not only for the sake of company growth but also so said companies can continue to provide struggling citizens with their benefits. An overall APR of 300% exists in certain states like Alabama and Georgia, but most fall in lower than that, such as Virginia at 264%, Arizona at 207%, Minnesota at 118% and Florida at a mere 30%. The problem with states having lower overall APR rates, however, is that loan companies stay away from them because they cannot survive on the enforced lower overhead, and borrowers in those states suffer as well because their loan options are subsequently and severely limited.
In addition, all loan servicing companies apply a series of other fees that are incorporated into the APR, which is why the amount of each loan compounds significantly beyond the principle. Although they vary, these fees typically include:
- Title charges
- Loan origination fees
- Credit Costs
- Processing fees
- Penalty fees
- Application fees
- Document fees
- Lien fees
- Late fees
These extra expenses are numerous but necessary to finance the loan process. Again, they serve for the benefit of both lender and borrower to ensure the accurate administration of the loan cycle from beginning to end.
Such fees differ in amount from company to company and state to state, but they are as consistent as they are important. Borrowers need to factor them in as they calculate their loan payments and adjusted balance throughout the life of the loan. Doing so minimizes the chance of errors and other problems, including the dreaded repossession.
Believe it or not, the title of the asset involved plays a direct influence in these fees, how much they are and how they are applied. This is another reason titles are so important.
So how do borrowers get their titles and apply for title loans in these states? Well, the processes are still basically the same, but the differences, in the details, bring about differences in the results. In order to obtain a title copy, drivers must visit a DMV or Secretary of State Office and request one, with varying application fees. The required documents, too, are similar, yet the proof of auto insurance isn’t always necessary for borrowers to submit at either DMV/Secretary of State offices or the loan servicing companies at which they apply for their title loans. The point, though, which bears repetition for the sake of emphasis, is that borrowers who apply for their title loans without a title can avoid complications by knowing what they need according to state regulations and then prepare themselves beforehand. This common sense tactic is required in every state where title loans are legal.
In the end—and this cannot be stated too often either—borrowers need a vehicle title in order to qualify for a title loan. Agents are available to assist borrowers in acquiring them, but title loans, by definition, require the vehicle title so loan companies are able to securely issue the amounts requested without risk of loss. This protects both lender and borrower. Once the title loans are paid off, the vehicle titles are safely returned to their rightful owners. Applying for title loans without a title would be unwise and unsafe for everyone. Anyone requesting a title loan without a title should keep this in mind and make certain to have the title to the vehicle at the onset of the application process. The safety of the borrower’s financial integrity, credit rating and vehicle depend on it.
Helpful Resources & Links:
- Consumer Affairs: Title Max
- Consumer FTC: Car Title Loans
- ehow: How Much Can I Get for a Title Loan?
- ehow: Which States Allow Title Loans?
- Investopedia: Car Title Loans
- Investopedia: States That Allow Car Title Loans
- Investopedia: What's the Difference between Interest Rates and Annual Percentage rates?
- Investorguide: Car Title Loans 101: Guide to Using Title vehicle for collateral
- LA Times: LA Finance Auto Title Loans
- Michigan Department of State: Lost Title
- Wikipedia: Title Loan